After reaching 11-month highs last week, oil prices fell on Monday as China reported the most rise in daily coronavirus cases in more than five months, reigniting lingering concerns over weak demand.
International benchmark Brent crude was trading at $55.19 per barrel at 0702 GMT for a 1.42% fall after closing Friday at $55.99 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $51.73 per barrel at the same time for a 0.98% decrease after it ended the previous session at $52.24 a barrel.
Monday’s price slump was spurred mainly by demand concerns after more than 100 people tested positive in Hebei province in northern China, one of the world’s largest oil consumers. The government imposed partial lockdowns and travel restrictions in and around the province bordering the capital Beijing.
Further weighing on prices, the number of US oil rigs increased by eight to 275 last week compared to the previous week, signaling greater short-term output and raising supply glut concerns.
Political Risk and Oil Analyst Jose Chalhoub told Anadolu Agency that last week’s price jump was a direct impact of the recent decision of the OPEC+ deal to keep current cuts in January, as well as the upcoming stimulus package in the US.
He recalled that the recent seizure of a South Korean vessel by Iran shows that geopolitical risks still weigh heavily on the oil market aside from the decisions on supply and demand by the main players.
He added, however, that "in the coming months the story could change and prices might not sustain their current positive momentum with the pandemic still present, more production coming from Libya, the potential rise of Iranian oil production depending on the moves by the Biden administration in the US and how OPEC and non-OPEC behave while the global economy is still in pain."
By Sibel Morrow